What is the subscription revenue model?
Subscription revenue models are among the oldest ways for a publisher to get paid. They predate the rise of mass advertising in newspapers and magazines in the 19th century — and today, they’re a refuge from plummeting print and digital advertising rates.
From hard paywalls to freemium deals, indie publishers and content creators are using a myriad of strategies to bring in money from regular readers.
The model is simple. Readers pay a fee to access a publication on a weekly, monthly or yearly basis. Some publications throw in perks or bonus material to subscribers, while still permitting limited access to non-paying members. Others strictly guard access to paying members through the use of a digital paywall.
Indie publications today turn to subscriptions as a way to generate consistent income without leaning on advertising or sponsored content. And they’re not alone. Even big players like the New York Times are focused on attracting and retaining long-term subscribers by restricting free access.
Your publication’s subscription model for news will vary by the size of your audience, the scope of your editorial ambitions, and your brand recognition. But there are a few key points for any news publisher to consider when drafting up their publication’s reader revenue model.
Types of subscription revenue models
No two publications operate in exactly the same way, because no two audiences have the same views on paying for media.
The digital landscape has given rise to a variety of subscription models, each designed to balance the need for revenue with audience engagement, ethics and accessibility. From traditional paywalls to more nuanced approaches like freemium models, publishers are constantly innovating to find the right fit for their content and readership.
What is a paywall?
Before diving into the different subscription models, it’s important to understand what a paywall is. A paywall is a digital barrier that restricts access to online content and requires users to pay a subscription fee or make a one-time purchase to view the content.
Here are four of the most common subscription revenue models seen among digital publications, big and small:
1. Hard paywall: A hard paywall forces readers to pay to read even one article from your publication. There are no freebies or grace periods. Major newspapers like the Wall Street Journal use a hard digital paywall, although the WSJ does give limited access to readers who it believes may pay for a subscription in the future.
2. Freemium: Instead of locking everything behind a hard paywall, a freemium subscription revenue model gives readers limited access to your publication for free, while opening everything to paying subscribers. This is one of the most common subscription models, with newspapers like the New York Times giving free access to five articles a month.
3. Free trial: The free trial is essentially a combination of the freemium and hard paywall models. Readers must sign up for an account and, eventually, pay, but can read for free for a limited time. For example, National Geographic offers a 30-day trial for free on an annual subscription to its digital magazine.
4. Micropayments: Instead of charging a flat subscription fee, the micropayment model charges readers a tiny fee (sometimes as little as 20 cents each) by the number of articles they access from your publication. This subscription revenue model is relatively new, but publications such as the Winnipeg Free Press have experimented with it.
Impact of the subscription revenue model and news paywalls on readers
Generally speaking, the more restrictive your publication is around free access, the tougher it will be to grow your audience. There is evidence that paywalls can drive readers away from your publication. Everybody loves free stuff, and forcing people to pay, especially through auto-renewing their subscription, isn’t going to be popular with everyone.
And that’s alright! At the end of the day, you need steady money to pay your staff, freelancers and all other expenses that come with running a business. For an indie publication, subscriptions provide a stable source of revenue independent of the ad market, as well as a way for readers to invest in the publication’s success. Subscriptions build community and the stable operating revenue your publication needs to grow.
Your value proposition to readers, and their ability to pay, will determine how readers respond to your subscription revenue model. If you’re a legacy business publication like the Wall Street Journal, a hard paywall makes a lot of sense. Their readers have deep pockets, and they’re keen on getting the best information possible to drive their business.
On the other hand, if you’re running a small community publication, local residents might find it difficult to justify paying out-of-pocket right from the start. They may want to explore your website or newsletter first and get a feel for how you operate before handing over their credit card information. In those cases, a freemium or free trial model might work best.
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Ethical considerations on news paywalls and the subscription revenue model
When planning out your subscription revenue model, it’s important to consider how a digital paywall will affect your readers’ access to important information. Independent journalism is seen as critical to the function of modern democracies, and forcing readers to pay for such a service can turn vital journalism into a commodity.
This can leave wealthier readers with better quality journalism about the state of their community, and force poorer ones to turn to unreliable news found on major social media platforms or clickbait sites. This can be catastrophic during emergencies affecting your readers. What would happen if, for instance, your publication’s paywall prevents someone from learning about a boil-water advisory in their hometown?
This balance between stable revenue and an informed public isn’t easy to strike, but publications need to consider it seriously. As researchers at the University of Texas at Austin’s Centre for Media Engagement put it: “In the end, the ethics of paywalls may come down to the difference between what is good for business and what is good for society.”
Again, the question comes back to your audience. Who are you serving, and how? Understand your ideal audience. If you’re trying to cover the arts in a small region, and your ideal reader is a concert goer who wants to support the local scene, a hard paywall may push them away — even if it seems more lucrative to you.
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Where to start
If you’ve got an idea of a subscription revenue model for your publication, don’t just throw up a paywall and call it a day. Do your research. Understand how your audience might react to a paywall, including whether it might drive away readers. Start collecting data on the average incomes of your readers, if possible, to get a sense of pricing. An audience survey is a good place to start.
The Kerr County Lead exemplifies an effective approach to local journalism by providing free access to most content while offering exclusive benefits to paid members, like access to their premium newsletter. They are transparent about how memberships contribute to their reporting and encourage community support, which helps fund their high-quality journalism.
Above all, don’t be ashamed to ask for money. Mission-driven publications need to keep the lights on. That might mean fundraising drives, grants or even advertising deals, but subscriptions are among the most stable funding arrangements out there. You’re asking for readers who love your publication’s work to hire you — and put their money where their mouth is.
We understand that news entrepreneurship can feel challenging, but you are not alone!
Book a free chat with us to share your challenges, and we will provide tailored insights on how Indiegraf’s technology and services can help you overcome them. Whether you’re looking to engage your readers for the first time or seeking to enhance existing support, we’ll guide you through proven strategies to convert your audience into sustaining financial contributors.
